UPS has begun sending letters to about 105,000 package van drivers offering them voluntary severance packages worth $150,000, to resign, the company confirmed on Wednesday.
A federal judge last week cleared the freight transportation giant to move ahead with buyout offers over objections from the Teamsters union. UPS (NYSE: UPS) has decided to reduce headcount by 30,000 this year as part of a network consolidation plan aimed at reducing costs and improving efficiency amid declining parcel volumes. During court arguments, Teamsters lawyers said the union expects up to 10,000 drivers to accept the company’s offer.
The Driver Choice Program gives full-time drivers the option to leave their job in exchange for a $150,000 pre-tax separation payment and earned retirement benefits, such as pension and healthcare. Drivers are eligible for the lump payment regardless of seniority.
Genny Bowman, vice president of communications, confirmed that UPS has started informing drivers across the country about the buyout offer.
“We are sharing details about the program with our drivers over the coming days,” UPS added in a statement.
The company has set the separation date for late April, according to court documents.
UPS has indicated that involuntary layoffs are also possible, depending on how many drivers accept the severance package. The company is separately reducing warehouse workers through a combination of attrition and layoffs as it closes facilities. Twenty-two facilities are slated to close this year.
About 3,000 drivers took a company buyout last fall, but that package was much less generous than the Driver Choice Program. The earlier payout provided $1,800 in severance pay per year of service, with a $10,000 minimum.
The Teamsters complained that UPS violated the national contract signed in August 2023 because UPS committed to add workers and that the buyouts amount to a change in employment, something the union claimed must be negotiated with the union. Judge Denise Casper of U.S. District Court in Massachusetts rejected the union’s argument that workers could be harmed by resigning, saying the results of any arbitration would apply to them and that buyouts are a better option than having employment terminated.
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